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July 16, 2016

1

Becoming a China Expat

by mikediliberto

Making the jump from China traveler to China expat is still a common occurrence, despite the reported decline in the traditional expat packages in Tier-1 cities like Shanghai, Beijing, and Hong Kong.  Living and working an a foreign country is a complicated process, within both the new country as well as your home country.  Expats in China are subject to a dizzying array of considerations.

Visa types, financial regulations, different tax rates, and now mandatory social insurance contributions. Add to that the complications of taxes and financial regulations in your home country, and it’s a brain-full!

As with any regulations, the laws of China and America are constantly changing.  Your best bet, before your move, is to meet with both a US and Chinese tax expert to determine the best way to structure your salary, tax filings, bank accounts, and etc to make sure you minimize your tax burden and stay on the right side of the law.

Don’t let a few regulations scare you away, however.  I have had amazing experiences as an expat that I would not trade for anything, and I know quite a few fellow expats, my employees and otherwise, that would say the same.

There are many different classes of Chinese Visas, twelve in the “ordinary” classification alone, however most overseas business people and expats are going to get one of two visas:

M-Visa – This visa is for professionals that will travel to China for business purposes but are not employed or paid by a Chinese company.  Generally it’s expected that holders of M Visas spend less than 183 days on the ground in China, but there is no regulation against going over this amount of time, although it does have tax implications. M Visas are, like most China Visas available in a variety of durations (up to 10 years) and number entires (one, two, or unlimited).  M Visas have per-entry durations of 30,60,or 90 days of each visit.

Z-Visa – The Z Visa is the Visa issued to a person who will be employed by a firm in China.  In some cases, where employees are hired by the local subsidiary of a multinational firm, they may be paid some of their salary in China and some overseas; other times employees are paid fully in China in local currency.  For those of you that are US citizens it doesn’t make a huge amount of difference, as you’ll be taxed by the US government on worldwide income regardless. Z Visas are technically a “gateway” visa; the visa itself allows only a single entry into China, but once in China you can “trade” your Z-visa and employment permit for a residence permit that permits you to live in China, and freely come and go, for 1 or 2 years.

This post originally started as a “China visa and expat taxes” post, but I realized each one of these topics make a whole post on their own. So we will start with getting your Visa and becoming a resident of China.

Step by Step

M-Visa

Getting the M Visa is fairly straightforward.  Like everything in China, it’s complicated but generally well documented.  The first step in getting an M-visa is to get an invitation letter from a business in China. This may be a subsidiary or related business to your current employer or it may be a supplier or other unrelated party.  These days invitation letters are being scrutinized more than ever, so you’d be well advised to follow an established template, available here. You can apply in person for the M-Visa at your local consulate, or you can use the services of a visa agency.  I use the “China Visa Service Center“, but a quick google search will reveal many more.

Z-Visa

The Z-Visa process is a lot more entailed; It begins with receiving a job offer from a Chinese firm.  As we mentioned above, the Z-VIsa is just a gateway visa, which, together with an employment permit, you can trade for a residence permit.  So how do you get a Z-Visa? You can divide the process into two stages: getting ready to have a Z-visa issued, and then things to do within 30 days of entering China on a Z-Visa. In order to undertake many of the tasks related to the Z-Visa, you will likely need to be in China on an M-Visa first.

Since the process is quite entailed, I’ve put together a spreadsheet showing each stage and the items required from you as well as from your Chinese employer, available here.

Once you are ready to have a Z-Visa issued, there are really only two places where it can be issued to you:

  • Your Home Country
  • Hong Kong

Whether or not you get to just jump over to Hong Kong to get your Z-Visa will depend entirely upon how chummy you employer’s HR manager is with the local government officials.  During my tenure as General Manager of our China operations we always managed to get Z-Visas issued in Hong Kong, but I was told this was relatively rare.

Once you have the Z-Visa, you have 30 days to return to China and trade your Z-Visa for an employment permit and then residence permit for you (And your spouse and children, if applicable).

Getting a Second Passport

Applying for your Z-Visa, from start to finish, can take 1-2 months. During this time, you may be restricted from traveling due to not having access to your passport. If you have a legitimate need to travel during this process, you can apply for a second passport from the US state department.  Information is here

Conclusions

While complicated, the process and experience of working in a new country is a fantastic experience that will likely give you lifelong lessons both personally and professionally. The steps that I recommend following are:

  1. Obtain an M-Visa to China
  2. Travel to China and start your Z-Visa process
  3. Meet with tax professionals to understand how to best structure your salary, bank accounts, and tax filings
  4. Have an amazing expat experience!

As always, please reach out any time with your questions, comments, or concerns! mikediliberto(at)gmail.com

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